‘Daily deals sector must speak language of marketers’

Groupon hit the headlines late last month after posting a surprise quarterly loss, sending shares down as much as 28 per cent and prompting the dismissal of its quirky co-founder and CEO Andrew Mason.

Mason wrote in a candid departing memo to former colleagues one of his biggest regrets at Groupon, which was once the darling of the Silicon Valley by becoming the first daily deals site to float on the US stock market in 2011, was letting “a lack of data override my intuition on what’s best for our customers”.

Rival LivingSocial, which according to industry sources is expected to turn profit this year after posting successive multi million dollar net losses, believes strong customer service provided to consumers and merchants and technology such as data analytics and mobile apps can set up a daily deals business for success.

Nigel Clarkson, LivingSocial’s head of sales for UK and Ireland, says the company does not call its offers “daily deals”, it refers to them and treats them as marketing campaigns.
He adds: “Our guys on the field are marketing consultants, not sales people. They work with our merchants on how they engage above and below the line, particularly with businesses that don’t necessarily have econometric models or social media calendars. They can use our data set, which allows us to understand what our customers want almost automatically.”

A spokesman for KGB Deals, the tenth most-visited daily deals site in the UK according to comScore, says “the excitement of the honeymoon period for daily deals players is now over”, with the focus now shifting from launch acquisition strategies to building lasting relationships with consumers and merchants.

It is not just pure play daily deals businesses that have struggled to make the business model work. Last week Nectar confirmed it is to close its daily deals platform just nine months after launching. It follows Trinity Mirror’s Happli and Gumtree, which discontinued their daily deals offers just months after launch in 2012.

Mark Bower, ecommerce director of Time Out, which launched its daily deals service in 2011, says brands looking to expand into daily deals to create an additional revenue stream must not forget their brand values.

He adds: “It is inevitable customers will shop around so all our offers have to provide value for money as well as fit within the brand and be something we would comfortably recommend on the site or in the magazine. While this makes things challenging at times, it means we are true to the heritage of the brand and so keeps quality high.”

Daily deals sites can amplify their reach by partnering well-known brands. Organic social media has driven up to 30 per cent of deal redemptions for LivingSocial, for example.
Peter Briffett, LivingSocial’s UK and Ireland managing director, says : “A great offer with a good partner like Starbucks, Boots, Comic Relief or M&S creates a great buzz for the brand and is a real interest driver – [consumers] become the brand ambassadors for us.”

Read Marketing Week’s retail expert and deputy news editor Rosie Baker’s view on why she feels the daily deals market needs a shakeup.